WGO - Winnebago

[NomadicRiley]

Anyone familiar with Winnebago or the RV industry in general?  In looking through some 13Fs I noticed Norbert Lou (Punch Card Capital) purchased quite a few shares last quarter and it wasn't a name I'd seen popup anyway else before.

 

At first glance, there are three primary players in the industry - Thor (THO), Forest River (owned by Berkshire Hathaway) and Winnebago.  Winnebago recently purchased Grand Design, which substantially increased its exposure to the faster growing, lower end of the RV market (RV's that are towed vs driven).

 

They appear to be taking market share from the two leaders and have also been able to increase margins, but I don't yet have any insights as to the why or of it is sustainable.

 

Curious if anyone else has any ideas.

 

Thanks.

[LongTermView]

They appear to be taking market share from the two leaders and have also been able to increase margins, but I don't yet have any insights as to the why or of it is sustainable.

 

Over what time period is this? Are they just taking back share that the two leaders took from them earlier or is it more than that?

[NomadicRiley]

They appear to be taking market share from the two leaders and have also been able to increase margins, but I don't yet have any insights as to the why or of it is sustainable.

 

Over what time period is this? Are they just taking back share that the two leaders took from them earlier or is it more than that?

 

More than taking back share.  They purchased Grand Design in 11/2016.  From their 10-Q, in 2017 (combined company) their market share was 7.4%.  It is currently running at 9%.

 

Few quotes from the most recent conference call

 

"Our continued strength in our Towable segment led by our Grand Design RV product line has once again grown revenues year-over-year and sustained share gains over 100 basis points."

 

(regarding class B motorhomes and the purchase of  Roadtedk/Hymer brands by Thor - industry leader)

 

"If you've looked at the retail market share results that have come out recently here from SSI, and as we all know, those are not always complete the moment that they're released, and there's a little ebb and flow of those as they settle. But I believe in the last retail report on Class Bs, we took somewhere in the neighborhood of five more points in market share in that category in that time period."

 

There's obviously a lot of consolidation going on in the industry - perhaps its similar to the airlines and once it gets down to a few major players, everyone margins could increase?

 

[NomadicRiley]

Also interesting to read actual dealers take (from RV News) on inventory / manufactures versus what the manufactures say in their conference call transcripts.

 

http://www.mirabelsmagazinecentral.com/digitaledition/index.html?id=0467a329-9602-4ccd-9937-7c278aaf8c65

[voyager]

The RV space can get inefficient sometimes because of the lack of coverage and cyclical. 

 

Don't know a ton about Winnebago.  The general trends in the space are that towables are growing in market share and motorized are shrinking.  As a whole, the RV adoption is supposed a long-term trend.  Keep in mind that the barriers to entry are seemingly low, though.  If you visit a Thor plant, it's clear that the manufacturing isn't too sophisticated, so you don't get scale like other industries.  Also, consumers are less brand sensitive than other industries.